This question is always good for getting people to pay attention to mainstream media and in particular, news outlets. They absolutely love bad news because it scares people, and people are easier to control when they are in fear.
Amazon founder Jeff Bezos was recently in the spotlight across mainstream news outlets because of a re-tweeted a CNBC clip of Goldman Sachs CEO David Solomon. In that clip, Solomon said that business owners should be ready for more market volatility in the coming months.
Why is there so much talk about recession? The Federal Reserve, which is the US’s central bank, is raising interest rates to slow the economy because inflation is too high.
The Fed has kept interest rates very low for a very long time, and the market has become addicted to cheap lending.
Additionally, raising interest rates in the US doesn’t affect just the US. Given the globalization of the economy, higher interest rates will affect markets globally, and other countries that increase their rates will also affect the global economy.
There are also other obvious factors at play, such as the war in Ukraine, drought in many regions of the world and of course, inflation.
There is a lot of pressure on the Fed to change course and keep interest rates low regardless of high inflation.
The markets want continued growth, but Main Street wants lower inflation. It seems Jerome Powell is siding with Main Street in this conversation.
The Fed is raising rates incrementally to give markets time to adjust. Interest rates have been going up from near zero in March 2022 to a range of 3% and 3.25% today, and the Fed is signaling interest rates could approach 5% in 2023.
This is a basic explanation for what is going on, but perhaps the better question to ask is “Does it matter if the US goes into a recession?”
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